More comprehensive technical study pushed for Malampaya’s life extension

Published August 5, 2020, 10:00 PM

by Myrna M. Velasco

The country’s lawmakers as well as state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC) are pushing for a more comprehensive technical study to assess the scale of extractable gas resources that shall underpin life cycle extension for the Malampaya gas field.

Through House Resolution No. 1063 filed in the House of Representatives, several lawmakers are pushing for the country’s energy security agenda that shall be mainly anchored on the development of indigenous resources, including oil and gas as well as renewable energy (RE) installations.

For one, Representative Godofredo N. Guya noted in a virtual forum that the clock is now ticking for the remaining years of operations of the Malampaya field, hence, a decision from the government shall already be pressed to determine if that gas facility can still continually supply the energy needs of the Philippines.

Congressman Presley C. De Jesus of PHILRECA Party List, noted though that government to be led by the Department of Energy (DOE) must carry out a deep-dive technical study first on the extent of resources that can still be commercially developed before giving go-signal on fresh flow of investments in the gas project.

He further acknowledged the need for government to sort out challenges hamstringing investment flow – primarily in the exploration of oil and gas resources and in enticing capital for the energy sector in general.

De Jesus said such policy concerns will be tackled in the resolution that they have filed in Congress; and it is targeted that discussion and debates on the measure will kick off next week at the House Committee on National Defense and Security.

Retired General Rozzano D. Briguez, president and CEO of state-owned Philippine National Oil Company-Exploration Corporation (PNOC-EC), said the company will advance partnership with expert institutions, such as the University of the Philippines, on target to undertake further study of the country’s petroleum basins, including residual prospects for the Malampaya field. That initiative, he said, will be in coordination with the DOE.

Lack of dependable and viable seismic data, he emphasized, had partly contributed to the lag in the country’s petroleum exploration and development activities – that often in a year, it just entails one well drilling for the Philippines compared to 13.5 to 14 wells in neighboring countries such as Malaysia; and even more aggressive in the case of Indonesia.

Briguez said the company “intends to pursue collaboration with other institutions and companies to further study Philippine sedimentary basins to assess their petroleum potential given new information and advances in technology.”

He explained “the main objective is to open new areas of exploration by ensuring that the country’s geologic sedimentary basins are well-studied and properly marketed to possible investors.”

The PNOC-EC chief said their targeted study would eventually underpin plans to “pursue exploration and new service contracts,” primarily in prospect areas in Cotabato, Cagayan, East Palawan and West Philippine Sea basins.

Even the DOE previously admitted that “weak data” had been among the factors wobbling investors’ entry into the country’s upstream petroleum sector.

Beyond that, the country is also shackled by more complex issues, such as the territorial dispute in the West Philippine Sea and the seemingly low prospectivity of petroleum basins in the country.

There are also policies and rules still needing to be cleared up – such as the income tax treatment on the royalty sharing arrangement for the Malampaya project, which is still pending with the Supreme Court.

As the energy department has laid down, the tax case raised by the Commission on Audit (CoA) and the escalation of diplomatic tension at the West Philippine Sea fundamentally limped capital flow in the Philippine upstream oil and gas sector.

In terms of prospectivity of petroleum reserves, it has been emphasized that it could be very marginal in the Philippines – at just the rate of 10 to 20-percent; while other countries even in the ASEAN region have higher scale of prospectivity.

The upstream petroleum sector is one of the segments that the DOE would want to revive for investment flow when the coronavirus pandemic wanes, although it is cognizant of the fact that this could be a hard sell proposition given the decline of oil prices especially at the height of lockdown enforcements in many countries.

The energy department is lining up tender process for several petroleum blocks – including those in the West Philippine Sea, but it indicated that actual bidding will be scheduled when interested parties can already physically attend the process.